Will a clampdown on loot boxes force the video games industry to rethink its approach to pricing and brand licensing?

EA Games hit turbulence after introducing ‘Loot Boxes’ into Star Wars Battlefront II.Fifteen European gambling regulators, plus the Washington State Gambling Commission, recently agreed to “address the risks created by the blurring of lines between gaming and gambling” in what could prove to be the start of a serous challenge to game developers’ monetisation strategies.

The focus of the regulators’ action are ‘loot boxes’ – an increasingly popular way for games developers to monetise titles which sees the player buy a random and, at the time of purchase, unknown selection of power-ups, add-ons and abilities which can boost their performance within the game.

While low-cost games, especially those made for mobile platforms, have long included in-app purchases, developers have more recently been including ‘loot boxes’ even in premium titles.

Earlier this year games giant EA attracted negative headlines around the world after extending them to Star Wars Battlefront II, a move which angered many of the game’s buyers.

The fallout lasted weeks, with disgruntled players complaining that the loot boxes allowed other players to buy themselves an in-game advantage, a situation known as ‘pay to win’.

Hostility was perhaps especially fierce in some quarters as many players were still disgruntled at how the firm had handled the 2015 Star Wars Battlefront, which took the title of a much-loved 2003 game but dropped its offline gameplay for a largely online multiplayer experience in which some players spent more time camping out at the locations of on-map power-up and vehicle tokens then they did playing the objective.

While a substantive offline mode finally made an appearance, it only did so just before development work on the game ceased and remains affected by several bugs.

With online forums making a lot of noise, it was no surprise when newspapers and the media picked up on the row and EA found itself accused of using a family friendly brand to push what detractors see as an unregulated form of gambling.

One of the chief concerns among critics is that loot boxes aren’t signposted in the way that common gambling games are and don’t require regulator oversight.

The furore led EA to remove the loot boxes from the game and promise never to reintroduce them into the title, though some fans remain unhappy and blame the developer’s reduced monetisation opportunities for what they see as a slow trickle of updates for a game that fails to meet pre-launch talk of a “live service”.

Other developers have found themselves on the receiving end of similar player revolts and, following a ban on loot boxes by the Belgian authorities, are now having to update their games.

Paid loot boxes were removed from Overwatch in Belgium.

Some, such as Blizzard, are allowing players to continue buying the boxes with virtual currency earned by playing games but removing the option to use real cash, while others are dropping the option entirely.

So far only Belgium and the Netherlands have actually banned loot boxes, though politicians and parties in other countries have signalled support for similar tough action.

But the joint statement from the gambling regulators of Austria, France, Czech Republic, Gibraltar, Ireland, Isle of Man, Jersey, Latvia, Malta, The Netherlands, Norway, Poland, Portugal, Spain and United Kingdom, was clear about the concerns they have and could ultimately spur further action.

However there remains the question of how games makers are to respond if their options for post-sale monetisation are limited.

With standard editions of major titles already costing around £50 at launch, players would surely resist any attempt to push prices higher, especially as the trend for online multiplayer games means players also have to pay up to £50 each year to Microsoft and Playstation just to access the online component.

And while one option could be to produce more games with substantial offline content, giving them a longer shelf life as new players wouldn’t risk paying out only to find everyone else has already moved on to the next title, this isn’t likely to work with sports titles which depend on an annual release in order to stay relevant.

Sports and other big name brands are a significant cost for developers.

So if developers can’t maximise post game income, perhaps they’ll seek to protect their margins by reducing upfront costs? The need to produce a high quality product means they can’t reduce spending on the actual development so where else can they cut costs?